Toshiba on offense in format war

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More than a week after being dealt a potentially mortal blow by the defection of Warner Home Video to the Blu-ray Disc camp, HD DVD developer Toshiba is striking back.

The company, left with just two major studios supporting its vision of next-generation technology, said Monday that it is stepping up its marketing campaign to boost the HD DVD format.

But with the centerpiece of this campaign consisting of across-the-board player price cuts — prices for the two cheapest players are being halved, to $150 and $200 — observers wonder if Toshiba isn't merely engaging in a fire sale, blowing out its HD DVD machines and pitching them to consumers as a way to get their existing DVD libraries to look better.

Furthering these sentiments are Toshiba's stated goal to spotlight not just the superior benefits of HD DVD but also "the benefits HD DVD brings to a consumer's current DVD library by upconverting standard DVDs via the HDMI output to near-high-definition picture quality."

"It seems like a smart strategy to note that there's value in an HD DVD player even though there is a reduced amount of content available for it," said analyst Tom Adams, president of Adams Media Research. "That's smart both for existing buyers, with whom they have a potential problem, and for purposes of continuing to sell players, where for $150 it's a heck of a DVD player."

Toshiba is slashing the suggested retail price of its entry-level HD-A3 player from $299.99 to $149.99. (This is the same player that was widely available at Wal-Mart and other discount chains just before the holidays for less than $100.)

The midrange HD-A30, with true HD (1080p) output, now retails for $199.99, down from $399.99. And the high-end HD-A35 goes from $499.99 to $299.99.

Yoshi Uchiyama, group vp at Toshiba's digital A/V group, said the company is aiming for the mass market, which he feels is put off by the higher prices for Blu-ray Disc machines ($300 and up).

"While price is one of the consideration elements for the early adopter, it is a deal-breaker for the mainstream consumer," Uchiyama said. "Consumer sales this holiday season have proven that consumer awareness of the HD DVD format has been elevated, and pricing is the most critical determinant in consumer purchase decisions of the next-generation HD DVD technology."

Toshiba also plans an extended advertising campaign involving television, print and online media channels. Also in the works are joint marketing and promotional initiatives with retailers and studios. One such initiative already in play is "The Perfect HD Offer," in which consumers who buy any Toshiba HD DVD player get five free HD DVD movies from a selection of 15.
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